Funds Management Companies

[COLIN]

Any thoughts on AUW, the split-off from Tower? I know they are more than just a funds management outfit, i.e. they include Trustee services, financial planning, etc., but they are now in the ASX200 and had over $6b in FUM on the last figures I have seen. P/E around 18.

[macduffy]

I'm one of many holding these from the Tower spin off and have considered quitting from time to time.
However, various brokers/commentators seem quite keen on them, especially since they merged with the Bridges outfit. Company also confident of good performance in current year.
So I continue to hold but doubt if I'll be adding to the holding.

[Stranger_Danger]

I got out of AUW at $2.50.

The two catalysts were

(a) GPG getting out at a similar price.

(b) Trying to make sense of their financial statements.

Regarding (b), I couldn't and (a) made the decision for me.

AEF is my only funds manager holding.

[The Big Ease]

anybody rate PPT (perpetual)?

[mark100]

PPT have generally been highly regarded however they have got themselves into a bit of a pickle with a cash fund that guarantees a rate of return to investors. Due to the credit crunch this fund has not met its required rates of return and PPT is having to top it up in order for investors to get their set return.

While this is a temporary problem it could persist for another year or so which means PPT could remain out of favour for a while yet. That said, it is looking historically cheap

Don't now a lot about AUW. All the brokers like it and it seems to be trading on a FY08 PE of around 14. Guiness Peat do seem to have timed their exit to perfection however

[thereslifeafter87]

FPS seems ok, but one thing I noticed when I looked at it was the constant share buybacks. Why buy back a stock that is trading well above book value?

The answer: to make up for the issue of options to executives. I feel this is a poor use of shareholders capital.

[mark100]

TLA87, most of the options are issued to staff and advisers with the exercise price inline with, or at a premium to, the current share price. This is obviously to retain these staff and advisers. And it is the advisers who get the clients to invest in Fiducian funds.

I wouldn't say it is a poor use of shareholders capital because the options still have to be exercised before they become shares and that money flows into FPS ie the shares are not free. The reason there are some options on issue with low exercise prices is due to the run up in FPS share price over the past few years. Also over the past couple of years I note FPS has still bought back more share than what has been issued due to option conversions